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Below is the Daily Market Commentary 21st October 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Equity markets opened positive but immediately succumbed to profit booking and fell sharply for the third consecutive session though it did recover somewhat towards the fag end to close with minor loss. Except Banks, Financials and Auto, all the other sectors ended in red. Bank Nifty ended at record high, thus keeping market losses under control. PSU Banks continue to garner lot of interest. Lot of stock specific action was seen in the market as the earnings season unfold.

Global cues were mixed as investors await release of US weekly jobless claims numbers while China Evergrande is closer to being formally declared as default. On the other hand, Moscow has ordered all shops, bars and restaurants to be shut against a backdrop of record deaths and infections.

The markets are likely to further consolidate given weak global cues, ongoing earnings season and elevated valuations. The earnings declared so far has been mixed with cost inflationary pressure being clearly visible on margins. Since the valuations are now at absurdly higher levels, many stocks are priced to perfection thus leaving very little room for any king of disappointment. Thus even slight deviation from result expectation is resulting in steep reactions. We would suggest traders to stay cautious given the kind of volatility being witnessed in the market. Investors on the other hand, should accumulate quality names on every dip as the margin pressure is short term phenomenon while the long term prospects remain bright for the equity markets.

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